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Charles H. Keating Jr.

News about Charles H. Keating Jr., including commentary and archival articles published in The New York Times. More

In the aftermath of the savings and loan scandal of the 1980's, Charles H. Keating Jr. became for many a symbol of everything that had gone wrong in a business whose collapse cost American taxpayers over $120 billion.The failure of a bank he controlled, Lincoln Savings and Loan, cost taxpayers $3.4 billion, the most of any thrift. Mr. Keating spent five years in prison after being convicted of federal racketeering charges. Released after the verdict was thrown out, he later pleaded guilty to four counts of fraud. And he went further than other bankers in his attempt to use his political influence to fend off regulators, enlisting a group of senators who had received campaign donations from him -- a group later known as the Keating Five.Mr. Keating stoutly maintained his innocence, saying that regulators had caused the failure of his bank. Prosecutors painted him in a starker light, and focused on the sale of $250 million worth of bonds, which later defaulted, to his own depositors, many of whom thought they were guaranteed by the government. One sales document introduced in his civil trial exhorted salesmen with these words: "And always remember the weak, meek and ignorant are always good targets."Judge Stanley Sporkin, who ruled in one civil suit, wrote: "Bluntly speaking, their actions amounted to a looting of Lincoln. This was not done crudely. Indeed, it was done with a great deal of sophistication."For decades, savings and loan associations, also known as S&L;'s or thrifts, had been staples of the American economic landscape -- solid if unexciting institutions whose major business was making mortgage loans within their community. But decisions to relax their regulatory structure led to an explosion of growth among thrifts in the 1980's. With caps on the interest they could offer removed, some thrifts were able to attract huge influxes of new funds just as the economy was recovering from recession.The new breed of aggressive S&L;'s moved into new lines of business, and Mr. Keating moved more aggressively than most into riskier investments, including junk bonds and real estate development. Pumped up in part by the S&L;'s investment, real estate boomed in the mid-80's -- and then fall back to earth. Hundreds of thrifts closed or were in danger of closing, leading Congress in 1989 to create the Resolution Trust Corporation.Mr. Keating had been a tireless campaigner against pornography and a dabbler in politics in Ohio when he moved to Phoenix in 1984 and began to move aggressively into real estate development through American Continental and Lincoln Savings.A month after Mr. Keating's company acquired Lincoln Savings in February 1984, the Government began investigating because of the company's surging growth. By April 1987, some regulators were already recommending receivership for Lincoln, but that only prompted an accelerated campaign to sell more bonds to depositors and a effort by Mr. Keating to obtain influence in Washington.He provided large campaign contributions to five United States Senators -- Alan Cranston of California, John Glenn of Ohio, Donald W. Riegle Jr. of Michigan and Dennis DeConcini of New Mexico and John McCain of Arizona -- and persuaded them to lobby savings regulators on his behalf. The five Senators were later sharply criticized because of those efforts.Lincoln Savings was seized in 1989.